Wednesday 24th of February 2010
Around five million Britons are always in their overdraft, a new survey reveals, something which an individual voluntary arrangement (IVA) could prove to be of assistance with.
The moneysupermarket.com poll shows that 12 per cent of people fall into the red five times or more every year.
But if using your overdraft is a common - and sometimes the only - way for you to meet your financial commitments then now could be the time to start asking questions on IVAs.
One question you may have is how an IVA can tackle your overdraft. While IVAs do not clear your overdraft for you, they can reduce your personal loan and credit card repayments.
If you dip into your overdraft to meet such commitments on a regular basis then an IVA can help. By freezing the interest rate on unsecured debt, you may find an IVA removes the need for you to use your overdraft as repayments are more manageable.
Kevin Mountford, head of banking at moneysupermarket.com, said relying on an overdraft "can be an extremely expensive debt to carry if it hasn’t been agreed with your bank in advance and, secondly, your bank can reduce the size of your overdraft with little warning".
By Chris King
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